The Individual Valuation of Aviation Carbon Dioxide Emissions: A Choice Modeling Approach

Abstract

In this chapter, we support that pricing carbon emissions policies in aviation might have a lower than expected impact on aviation activity, if such policies are accompanied by investments in environmental technology and an adequate communication strategy by the airlines, which eliminates information asymmetries. Furthermore, we suggest that firms' environmental strategies might be an important advantage in competition. Using orthogonal design techniques, we developed a binary choice experiment, in which carbon emissions are presented to 338 German respondents among other choice-related attributes. Estimating several binary logit models, we are in a position to compute the air travelers' willingness to pay (WTP) for carbon emissions reductions. Findings suggest that passengers consider carbon emissions in their individual airline (itinerary) choice decision, if they receive the corresponding information. We also show that the passengers' WTP for carbon emissions reductions is in line with recent estimates on marginal damage cost. Furthermore, we find that WTP increases for passengers with high environmental sensitivity, whereas it decreases for frequent flyers. Investments in environmental technology and airline commitment for environmental-related firm policy positively influence the passengers' choices. It appears that the average passenger is more sensitive to environmental issues and is willing to pay more for environmental protection than industry officials or policymakers presume.

Citation

Evangelinos, C., Tscharaktschiew, S. and Mietzner, M. (2022), "The Individual Valuation of Aviation Carbon Dioxide Emissions: A Choice Modeling Approach", Berrones-Flemmig, C.N., Contreras, F. and Dornberger, U. (Ed.) Business in the 21st Century, Emerald Publishing Limited, Leeds, pp. 157-176. https://doi.org/10.1108/978-1-80382-787-220221013